Tariff increase passes burden on to poor

Athina May

The South African Chamber of Commerce believes that the National Energy Regulator’s (NERSA) approval of a 9.4 percent electricity hike for 2016/17 may have a knock-on effect on interest rates and cost staff at some small businesses their jobs.

Chamber of Commerce CEO Alan Mukoki said the rise in already high electricity costs could force some businesses to reduce staff.

“The 9.4 percent increase will add inflationary pressures in the economy, this will not bode well with SMME (small, medium and micro-sized enterprises) businesses. Many may well start retrenching staff in an attempt to just keep afloat,” said Mr Mukoki.

The tariff hike, which was approved on Tuesday March 3, will come into effect on Friday April 1.

It was awarded to Eskom based on Nersa’s analysis of Eskom’s regulatory clearing account (RCA) application made in November.

Eskom applied for a 16.6 percent electricity increase to recover R22.8 billion they said was used to avert load shedding, but in a statement Nersa said the RCA balance of R10.256 billion would be recoverable from standard tariff consumers.

DA energy spokesman Gordon Mackay shared Mr Mukoki’s fears of job losses and accused Eskom of again trying to dump the “burden of its failures” onto consumers, and the poor.

“The average consumer is already faced with high food inflation coupled with higher interest rates, which has reduced their disposable income.

“Tariff increases further serve to increase business and manufacturing costs leading to further job losses and reducing our competitiveness globally. “Given the economic crisis we are facing, this is a cost we cannot afford,” said Mr Mackay.

The vice president of the Sanddrift and Tygerhof residents’ association, Aubrey Creighton, said pensioners and the poor would suffer the most.

“It is not good news for the country and especially the underprivileged. I am a pensioner, and by the time we get our pension increase, it’s already spent. We will not see an end to these increases,” said Mr Creighton.

The Brooklyn Ysterplaat and Rugby Residents’ Association (BYRRA) chairman, Rudi Wolter, said businesses would cover the high electricty costs by hiking their prices.

“We’re getting to a point where it starts to hurt. The community will carry the burden. We wanted better management of the resource,” said Mr Wolter.

Mr Mukoki said: “Internationally and in South Africa, mega projects tend to have huge capital budget and cost overruns.

“We would therefore urge government to increase and scale up its capacity for the management of mega projects risks, and extract the necessary funds to re-capitalise Eskom and reduce reliance on inflation-inducing tariff increases,” said Mr Mukoki.